Tuesday, July 29, 2008

Silver and Gold Prices Both Dropped Today in What Ought to be the Final Leg of this Correction

Gold Price Close Today : 916.50
Gold Price Close Yesterday: 927.70
Change: -11.20 or -1.2%

Silver Price Close Today : 17.330
Silver Price Close Yesterday : 17.417
Change: -8.7 cents or -0.5%

US Dollar Index Today: 73.29
US Dollar Index Yesterday: 72.219
Change: 0.62 or 0.9%

Sorry, I won't be publishing a commentary tomorrow. I have to take my wife Susan to Nashville for a heart catheterization. God willing, I will return on Thursday. Please remember us in your prayers.

I looked at the portfolio page I keep today for closing prices and I saw stock indices up, dollar up, and gold, silver, platinum, palladium, commodities, oil, & the euro down. Before I had a chance to analyze, my mind jumped up and said, "My, my! That's quite a dance there between markets & the Nice Government Men!"

Problem with thinking that way is that it's plausible, but hard to prove. Plausibly, the reason the dead frogs of stocks & the dollar keep jumping suddenly (other than bear market rallies) is that the Nice Government Men in the Let's-Keep-Crony-Capitalism-Alive Department keep on coming into the market & juicing it with bursts of buying, hoping to spark a reaction in other [idiotic] buyers. This in itself might be enough to rap metals and commodities on the knuckles, or if not the NGM will step in their with bursts of well-timed selling to maximize their expenditures. I'm getting so cynical I can hardly stand me.

Technically I can't see that today's trading alters the outlook for the Dow. It's squeezing out a contrary rally in a massive downtrend, after spending many months building a head and shoulders top. Where does this go but down? Once again, sell stocks & mutual funds & put proceeds into silver & gold.

The US DOLLAR INDEX ran past the 73 barrier today to close around 73.30. High of the last rally attempt was 74.31 in mid-June. If it passes that, it might run away to --- 75? Not much future for the dollar any way you cut it.

SILVER & GOLD PRICES both dropped today, gold $11.20 and silver 8.70 cents, in what ought to be the final leg of this correction. Why do I say that now? Because the GOLD/SILVER RATIO today rose to 53.02, the top of the range. Extremes in the ratio usually mark price extremes in metals. Listen carefully now to what I am about to say: if you still hold gold that you wish you had swapped into silver, tomorrow is the day to do it. (Notice, I am not recommending a silver-to gold swap, but gold to silver.)

Would I buy more silver & gold here? Absolutely Probably we will get one scary day out of the next two when the gold price returns to kiss $905 and the silver price -- $16.80? Be calm, don't let passing events shake you. A reader called my hand on those banks that closed over the weekend. Go to www.fdic.gov & look for the Failed Bank List. On 25 July FDIC close 1st Heritage in Newport Beach & 1st National Bank of Nevada in Reno. First was $3.4bn second $254 mn. Just small fry.

For those of you who bought Confederate General silver rounds on July 2: We were overwhelmed. Sold over three times what we had in stock, so we had to go back to the mint to have more minted. This is a painful 'pushing on a string" process, but we are pushing. As soon as the rounds come in one of our doors, we will ship them straight out the other. Thank you very much for your patience.

Argentum et aurum comparenda sunt -- -- Gold and silver must be bought.

- Franklin Sanders, The Moneychanger

"Buy Silver and Gold Coins at the Best Prices"

To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate in a bubble, primary trend way down.